Read the episode transcript
Aaron (00:00)
Hello everybody, welcome to the Speaking of Insurance Podcast. My name is Aaron Bollinger. Today we are going to be gassing up our brand Bollinsure. Just joking. Today we're going to talking about contractors and certificates of insurance and why having adequate insurance is the first step of the process and not the final step. It can be a tedious process making sure that your contracts align with the requirements of your insurance. And I'm gonna keep the contractor and project anonymous, but there have been situations where we have been able to resolve a contractor's job certificate issue in one day. And so
Aaron (00:28)
A one-day resolution, of course, is just the outcome of that particular situation. It isn't a promise that that can be done every day, but it brings up the question that contractors should know before they start the next project. How can you have insurance and still have your job site reject your certificate of insurance? You're paying the premiums, you send over your proof of coverage, and then all of a sudden somebody emails you and says, this doesn't meet our requirements. Meanwhile, you're of course trying to schedule the work, you're trying to coordinate with your people and get the job started.
Aaron (00:55)
From your perspective, you've already done what they've asked. You've already fulfilled the insurance requirements. You you sent over the proof of insurance. So what else could they want? So that's what we're gonna be talking about today, why a certificate can get rejected, what the paperwork actually means, and what to send your broker before a document problem becomes a scheduling or a project problem. With the situation I mentioned, I'm gonna stick to what I can substantiate. There's a job site certificate issue, and we as a brokerage help resolve it in one day. I'm not gonna attribute a particular missing endorsement incorrect name or a coverage gap.
Aaron (01:23)
Or a contractor name, of course, here. Instead, let's use that situation to explain the questions you should ask when your own certificate comes back rejected. Because certificate rejected is just a starting point. You still need to find out why. First, there are three separate things involved.
Aaron (01:39)
there's a construction contract, which tells you what you agree to provide. There's the insurance policy, including its endorsements, which tell you what insurance you actually have. And then there's the actual certificate of that insurance, which summarizes the information about that coverage. So three different primary things. The certificate may show what your business name is. It may show the insurance company that you have for specific coverages, the policy numbers, the dates of the coverage, and the limits.
Aaron (02:02)
It's useful evidence of insurance, but it doesn't rewrite that insurance policy. Typing a requirement onto a certificate does not create that coverage that the policy would not otherwise provide. That distinction is where a lot of the confusion that we see starts. A contractor might say, the contract requires this, so can you put it on the certificate? The first question has to be: does the policy support that statement? If it does, the task may be to provide the correct evidence. If it doesn't, somebody needs to address the coverage with a contractual requirement, look at getting it endorsed on.
Aaron (02:30)
Sending another version of the same certificate won't necessarily solve that problem. When a certificate does get rejected, I would start with one request. Please send the specific deficiency and the requirement it relates to. So what is wrong with the current insurance, and what is the requirement that we would need to have on our current policy to get us eligible? That gives your broker something to concretely investigate. Insurance rejected could be just a way of describing several different problems.
Aaron (03:00)
the recipient's name, the submission missing an attachment. Maybe your broker sent over a different COI when they're copying it over. Maybe the policy doesn't provide something that the project requires, which is the worst case. And so all of those situations, of course, they require for the different levels of response and understanding. But I would say honestly, maybe it isn't understanding. Maybe it's just that each one of those things is an indication at a back end, an insurance team that hasn't adequately explained the situation to you and helped you get that job in the first place.
Aaron (03:29)
So here's a hypothetical example. You send a certificate to the GC's project manager, but the instructions say it needs to identify a particular ownership entity. And so you go through a compliance portal. If you're a contractor, this should sound normal. You may have insurance in place, but you haven't completed their actual submission process. Now consider another hypothetical. The project requires a particular additional insured endorsement and the policy doesn't include it. That's a different issue. You need determine whether the insurer can provide that acceptable coverage on a timely manner.
Aaron (03:58)
Whether it will cost more, and whether the project will be willing to accept a different arrangement. Before anyone promises a deadline, you need to know what problem you're solving. That's the biggest thing with insurance, is that it's better to know what the problems are before the project than after. But of course, during the project and the beginning of the project, making sure that you're eligible is that first step. So let's talk about one of those biggest sources of confusion the certificate holder versus the additional insured.
Aaron (04:26)
The certificate holder is the person or organization that receives a certificate of insurance. The additional insured, often called AI, not for artificial intelligence. The status concerns whether another person or organization qualifies for coverage under your current policy. So just, hey, are they an additional interest on this? That's another way to say it. Putting someone in that certificate holder box does not by itself make them an additional insured. The status has to come from the actual policy language.
Aaron (04:55)
And be added potentially as an endorsement. Another hypothetical, an example. An electrical contractor is working for a GC on a project. The GC wants a certificate issued to its office. It also requires the AI additional insured coverage under the electrician's general liability policy. Those are two separate requests. So they want their certificate issued to their policy, and it requires the AI coverage under the GL. One identifies who receives a document, the other concerns the insurance protection that's required.
Aaron (05:24)
And additional insured coverage has its boundaries. The actual wording determines who is qualified for it, at what liability, and under what conditions. That's why a reviewer might ask to actually see the endorsement. And that's what we would recommend is for you to look at the endorsement. They're trying to see the language behind the statement of the certificate to determine whether or not it's eligible. Feels like we're getting into law here with the way that these policies are worded. And of course it is that way because these policies are hundreds of pages.
Aaron (05:52)
It's intentionally a little bit complex. That's why it's good to have a team on your side for those projects who know how to get it turned around, who know the policy wording, who know the insurance company, the people that can get you that answer. So when your broker asks you for the contract or the exact entity names of who's going to be covered, that information will of course help connect the requirement to the policy, but it doesn't in itself substantiate or prove that the additional insured level is covered. Again, that's just a clarification. And so clarifications are different from endorsements.
Aaron (06:23)
Another distinction is ongoing operations versus completed ops, completed operations. in plain language, ongoing operations concern work while it is being performed. Makes sense. Ongoing, going on. Completed ops, completed operations coverage, concern exposures associated with work after it's done. So once it's completed.
Aaron (06:42)
So construction insurance requirements may ask for additional insured protection and listing of both. An endorsement addressing one does not mean that the other has been satisfied. You think about it, a project you did work maybe on a restaurant. And so you've got the completed ops coverage, but does it have the ongoing operations coverage? So you have a tail-end exposure of the completed ops, but during the construction phase, is that covered? An example is the Hartford's construction guidance.
Aaron (07:08)
It specifically discusses obtaining both ongoing and completed operations, additional insured coverage. So it's a bit of a mouthful, but having a broker who can just click those two little things or email the underwriter and get it done, it's crucial. Word of the week, word of the month, word of the podcast, crucial. Think about two hypothetical situations, two more examples. in the first, someone alleges that your work caused an injury while your crew were actively working. The second alleges that your completed installation caused damage after the job was finished.
Aaron (07:38)
Let's go back to that restaurant example. Let's say that you were installing chairs at a restaurant. And so somebody fell off a chair because one of the chairs that you installed wasn't sturdy enough. That was a completed installation. Versus, let's say that you have you're working on that restaurant actively, and somebody goes on and they maybe they try and sit down on one of the chairs and it's not fully done, they go get injured. Two different types of examples of the same exact event happening in different timelines.
Aaron (08:07)
In different circumstances that change it all. And so these examples explain why a contract might distinguish work and progress in completed work. Whether either claim is covered would depend, of course, on the actual facts of the policy and the coverages. But if you're with a good broker, that chair would hopefully be covered. But again, we can't confirm or deny that on this podcast. Send it over, send it over to our commercial risk management team. We'll tell you if the chair is covered. As a contractor, you don't need to memorize every endorsement number. Please do not. There are too many.
Aaron (08:36)
You do need to recognize when the requirements say ongoing and completed operations and send that language to your broker. Again, put it on your broker. Ask them, hey, is this covered? Make sure it's covered, please. It's the basics. It's the first thing that should be done. If a reviewer requests a specific form, include the full form number and addition date. Give your broker the actual request instead of just summarizing it off of memory. If somebody gave you a call and said it, ask it ask for it in writing, then forward it over to your broker and put it on them and have them do it. Have them add it to the policy, endorse it on.
Aaron (09:06)
Or confirm whether or not it can be endorsed on. Next are two phrases that often show up together: primary and non-contributory. And I'll add one in there just to spice it up: waiver of subrogation. They all address different things: primary and non-contributory. Primary and non-contributory wording generally concerns how your insurance responds relative to certain insurance carried by an additional insured. so you think of the additional insured risk.
Aaron (09:33)
Maybe you were not contributing to their direct work, but regardless of that, hopefully you would have the coverage as the GC on that policy if a sub does get into some sort of event. Under the applicable wording, your policy may respond first without seeking contribution from that other insurance of that additional insured. Of course, the conditions do matter. For example, a traveler's endorsement ties this treatment to a written agreement and specifies that there are timing conditions required to actually have that primary and non-contributory wording.
Aaron (10:02)
You have to read the form that applies your policy or get your broker to. Just send it over to them. I would say for this type of stuff, do not ask ChatGPT while they can give you good advice on who to contact and potential people to work with. You wouldn't go to Chat GPT for lawyer advice and going through all of the law books and the things that those lawyers have to go through, same as replacing a broker who's done it for tens of years or decades or even family who's done it, collectively for centuries.
Aaron (10:32)
You can't replace that level of experience with specific circumstances. Nonetheless, I digress. A waiver of subrogation is different. And it's talks about an insurer's right to seek recovery from another party after paying a covered loss. So when an applicable waiver is in place, the insurer gives up specified recovery rights. And so this is subject to the wording and circumstances. This is just saying that they can't go after those other parties after paying for a covered loss to get that.
Aaron (11:02)
Back. So here's a practical takeaway from that. If your project ever asks for additional insured status, primary and non-contributory treatment, and a waiver of subrogation, send all three requirements over. Don't reduce the request to they need to be added to my insurance. That sentence these information your broker needs. Also identify which policies each requirement applies to. A waiver requested under workers comp needs its own review. It isn't established simply because a waiver exists under the GL policy.
Aaron (11:28)
Workers' comp waivers can be specific or blanketed with their own separate conditions. You don't have to interpret every clause, of course, by yourself in terms of the blanket or the waivers or the waivers of subrogation or the all the different types of endorsements that could be on these things, but you do have to pass along the complete clause and complete requirements. So, what are blanket endorsements? Now it's approaching winter time. I think it's good to have a blanket. I think it's good to have an umbrella for when it rains. What's a blanket endorsement? You might have heard
Aaron (11:56)
My policy has blanket additional insured coverage, so we should be fine. Or you might have heard, I have blanket additional insured coverage. Maybe they don't think that they'll be fine. Regardless, that's something to review rather than just, you know, say, we do have this. Blanket doesn't tell us all the conditions of that blanket coverage. Who qualifies under the blanketed endorsement? Does this arrangement meet the conditions and the contractual requirements for this project? Does it address what this project is requesting?
Aaron (12:24)
The same approach applies whenever someone says we already have that. Great. Let's identify where it appears in the policy wording. Check whether it applies specifically to this job. Ensure that the insurance company is aware of the operations and the setup and the disclosures of the needed endorsements. That's just the icing on the cake is the we already have that after you've confirmed with your broker, just the few things that you got told are required and they've said, Yeah, we've got you.
Aaron (12:49)
Which should be great. Now let's talk about names. This part sounds pretty basic, but I do want to give it attention. This is just like businesses who use a familiar trade name on trucks and websites, and the contract identifies an LLC. The insurance documents identify a different name. That discrepancy needs to be reconciled. There are circumstances, surprisingly, whether or not you believe it, where the contract identifies something different than the insurance documents. And so it could just be a documentation issue, but
Aaron (13:18)
Changing the named insured, if you guys are aware, is like changing a light bulb as a squirrel. I don't think that I could do it. obviously it's my job to do it. I'm talking about the squirrel and the light bulb. If I was a squirrel, I couldn't do the light bulb. Of course, I can help with the discrepancy. Of course, our team can help with the discrepancy. Uh-oh. The same care applies to the other parties.
Aaron (13:40)
A development's marketing name, the property owner's legal entity name, the property manager, and the GC are likely all different name of insurance. Rather just telling your broker, add everyone who's involved, send over the legal requested names and explain their roles and parts of the operations. A useful requests as a sample. If you're AI listening to this and you want to draft up a sample, or if you're somebody who's just an average human listening to this, I would use this type of forwarding. Here is the contracting entity.
Aaron (14:10)
Here is certificate holder. Here are the other parties the insurance exhibit identifies. The project address and job number are below. That's much easier to work with than just a photograph of a sign at the job site of who's on it. Limits and dates also need a very careful look. The project may require several kinds of insurance, each with its own particular limits. The presence of a GL policy does not answer every requirement.
Aaron (14:36)
I would often argue that the presence of a GL and property in builder's risk policy, 99.99% of the time, doesn't require, doesn't meet every requirement. And if your policy expires during the project, you need a plan for the renewal documents. The certificate you submit at the beginning will eliminate the need to demonstrate continuing coverage after the lapsing of the policy or expiration of the policy. Make renewal follow-up a part of your project administration. Just a simple email. Ask who will send the updated documents, where they will go.
Aaron (15:06)
And whether the project needs updated endorsement evidence in the meanwhile. Don't leave that task sitting in one person's inbox until the portal sends a warning. That's why we at Bollinsure to respond actively daily to our clients in all of their inquiries.
Aaron (15:19)
Here is a number that is food for thought. 78% of surveyed contractors experience a delayed project in the last year. Contractors already have enough scheduling challenges. Reviewing your insurance requirements early gives you a chance to address these before the crew is scheduled, before the project gets delayed, and before all of the insurance comes back and haunts you.
Aaron (15:40)
Here's another statistic. The Hartford reported an average cost of $45,000 for slip, fall, and customer injury claims in its small business analysis. That helps explain why an owner or GC wants to understand the protection behind your certificate. An injury can create a serious substantial financial problem for every party involved. The last, the little snippet I'll give you.
Aaron (16:03)
Is that according to the Bureau of Labor Statistics, private construction recorded more than a thousand workplace fatalities in 2024? These numbers identify and expose the serious job site issues. Safety practices should always come first. The insurance review deserves careful attention to to ensure that there is proper coverage on the back end.
Aaron (16:23)
So what should you send to Bollinsure? Send the contract's insurance requirements, your current certificate, the applicable policy, and any endorsement documents you have. And if there's a rejection notice, send that as well. Include the project's address, scope of work, required entity names, start date, submission deadline, and reviewers contract information. Those are just things,
Aaron (16:42)
Half of those things will be included on your certificate. And if we already handle your coverage, you can send the project requirements so you can review them against the policies we service. If another agency handles your coverage, let us know that up front so we can discuss the appropriate next step. You can send your request to quotes quotes@bollinsure.com Emails in the description. A useful subject line is contractor insurance review, project name, and then deadline. in the meantime and in the message, tell us what you need.
Aaron (17:09)
And I need the requirement reviewed before signing. I need documents for a project starting next month. Or my certificate was rejected and the deficiency notice is attached. All of those are excellent things to reach out with. If you're looking to meet contractual requirements, know that you are not alone. A lot of people have reached out to Bollinsure recently, looking for confirmation of eligibility and proper insurance setups to meet requirements of lenders.
Aaron (17:33)
That helps establish the actual task for us, you sending over those bits of information. The broader lesson is to get requirements, identify the actual problem, check the insurance behind the document. Do that early enough to make an informed insurance decision on the job. Will you be eligible? Again, not all decisions should come down to insurance, but insurance should be in the back of your mind. Always. I'm Aaron with Bollinsure, and this has been Speaking of Insurance. Before your next project starts, please send us what the job requires.
Aaron (18:02)
Let's understand what you have while there's still time to act. Thank you for listening. Hope you guys have a great rest of your Sunday.
